Fumio Dei

Voluntary export restraints and foreign investment

Abstract This paper develops a model in which both voluntary export restraints (VERs) and foreign investment can be considered. We investigate the welfare effect of additional foreign investment under VERs. It is demonstrated that if the commodity subject to VERs is more intensive in capital in the importing country which is assumed to be a debtor country, additional foreign investment into that country raises its welfare.

A note on multinational corporations in a model of reciprocal dumping

Abstract This paper introduces multinational corporations (MNCs) into a model of reciprocal dumping. The main results we obtain are: (i) the presence of transport costs causes mutual penetration of MNCs; (ii) the larger country tends to lose and the smaller country tends to gain; and (iii) global welfare increases.

Welfare gains from capital inflows under import quotas

Abstract The presence of tariffs was assumed in the literature which examined the effect of additional foreign investment on the welfare of the host country in the small-country setting. However, this paper analyzes the case of import quotas and shows that additional inflows of foreign capital improve the host countrys welfare when import quotas are kept constant.

Trade, Vertical Production Chain, and Competition Policy

The authors build a trade model that renders tractable the process in which imperfect competition in a countrys downstream sector affects the rest of the world through international trade. For this purpose, internationally traded goods are viewed as middle products in the vertical chain of production, in which middle products are produced upstream and transformed into final consumption goods downstream. Suppression of competition in a countrys downstream sector may serve as a beggar-thy-neighbor policy, increasing that countrys own utility while reducing that of its trading partner countries.

Product Quality, Wage Inequality, and Trade Liberalization

This paper constructs what we call a quality-differentiation model of Chinese trade. This model captures some salient features of Chinese trade and allows us to analyze the impact of trade liberalization on wage inequality. At present, Chinese trade displays the following features: high-quality cars are imported and low-quality cars are produced and consumed domestically, for which some parts are imported. These features lead us to consider trade liberalization as two types of tariff reduction: namely, a tariff reduction on final quality-differentiated goods and a tariff reduction on intermediate goods. This study shows that the two types of tariff reduction have completely different effects on wage inequality. Moreover, the results show that welfare inequality and wage inequality change in opposite directions when the tariff on final quality-differentiated goods is reduced.

Supermodularity and Global Supply Chains Without the South

We investigate why the South is hardly involved in the global supply chain for the Boeing 787. We demonstrate that if the production process is supermodular, the South is excluded from global supply chains.

Peripheral Tasks are Offshored

I build a model in which an offshoring firm has a core task and a peripheral task. This study demonstrates that in a world composed of the North and the South, the peripheral task is offshored but the core task is not. The study also demonstrates that offshoring does not occur if the skill level of the southern workers is too low.

Dynamic gains from international capital movements

Abstract The purpose of this note is to show that international capital movements cause an upward shift of the whole path of national income growth by extending the results of Amano (1965) and Gale (1974).

Quality of Labor Markets in a Developing Country

This study is an application of Yanos market quality economics to trade. It considers the quality of labor markets in a developing country and sheds light on an important role of the voting mechanism in the process of which the quality of labor markets is endogenously determined. Assuming the majority vote, it is demonstrated that if the timing of voting is wrong, a developing country misses high‐quality labor markets although trade provides an opportunity for it to reach such markets.

Optimal Competition Policy in a Model of Vertical Production Chain

The recent work of [6] and [8] has demonstrated that a country can increase its own utility, at a cost of its trading partner, by suppressing competition in that country’s market for nontradables. In other words, for a large country, suppression of competition can serve as a beggar-thy-neighbor policy similar to the imposition of a tariff. Since the end of the World War II, as represented by the series of GATT rounds, many countries have made continuous efforts to reduce existing tariff rates. As a result, remaining tariff rates in developed countries have become minimal. At the same time, a focus of international economic issues has shifted to non-tariff trade barriers. In particular, many policy makers have come to realize that the organization of a country’s internal markets, or in other words a country’s domestic competition policy, can serve as a trade impediment.1 In order to analyze the effect of such a policy, [6] and [8] develop general equilibrium models of vertical production chain, which can render the terms of trade effect of a change in the non-tradable sector tractable.